'Get it done': insurer loses bid to cash-settle roof repair

Homeowners who had repairs to their roof left unfinished by insurer-appointed builders have successfully appealed their insurer’s decision to cash-settle the claim after a dispute ruling required the repairs be completed.

The elderly couple’s property was damaged on October 20 2018, after a storm knocked scaffolding from a neighbouring home onto their roof.

The complainants lodged a claim on August 14 2020, almost two years after the event. They said the delay was due to their neighbour initially promising to repair the damage before reversing their decision.

An IAG-appointed builder, referred to as TD, inspected the home on September 2 and observed damage to the roofs of the building and garage and the left wall of the garage. The insurer accepted the claim but the claimants were dissatisfied with repairs conducted by TD, which IAG admitted were incomplete.

TD alleged that the homeowners did not allow him to access the property around July 9 last year and asked the insurer to cash-settle the remainder of the claim rather than complete repairs. The insurer later terminated its contract with TD before the work had been completed.

IAG hired a second builder, referred to as AB, to take over from TD and finish the repairs. The builder provided the insurer with a report inspecting the damage on September 24.

A few days later, AB called the insurer to say they did not want to work with one of the complainants, referred to as Mr S, due to his “unreasonable and erratic attitude”.

The Australian Financial Complaints Authority (AFCA) heard AB told the insurer that Mr S was “literally insane” and “would not be happy with any repairs completed”.

AB said they were able to repair the roof but could not warrant repairs to the garage because of its ageing structure and ongoing moisture issues that were unrelated to the impact damage.

IAG asked AB to amend their report to say they could not conduct repairs to the garage. The insurer offered to cash-settle for the repairs to the garage.

AFCA questioned the insurer’s reversal, saying that it authorised and approved AB to complete repairs to the garage after the initial report.

“The amended version of AB’s report said they could not warrant repairs to the garage. If this was true, it is not clear why AB would not have said so in the initial version of their report,” AFCA said.

It said that statements in the insurer’s claim notes indicated that the amendments were made to “justify the decision to stop repairs”.

The ruling referred to the General Insurance Code of Practice, which requires insurers to provide a “lifetime guarantee” to any repairs it authorises.

“The available information indicates the insurer can complete the repairs, and guarantee the workmanship of any repairs it authorises,” AFCA said.

AFCA said the reason the insurer offered to cash-settle the claim was due to AB’s dispute with the claimants.

It acknowledged information from the insurer that indicated that the homeowners had tight availability and may have been difficult but said it had not shown that they were preventing the insurer from completing the repairs or would be unsatisfied with finalised resolutions.

“The insurer found Mr S difficult to deal with. However, the complainants allowed the insurer’s contractors to attend their property, and the contractors did not say the attendances were unsafe,” AFCA said.

The decision required IAG to complete the repairs rather than cash-settle the remaining claim, saying that the complainants would be “significantly disadvantaged if the insurer leaves the repairs unfinished”.

It said within 14 days of the claimant’s acceptance of the determination, the insurer should appoint a qualified expert to complete the repairs and provide an appropriate timeframe for its completion.

“The parties will need to work together to allow the insurer to complete repairs. Depending on both parties’ conduct, their relationship may deteriorate to the extent that the insurer will not be able to complete repairs.”

AFCA said that the insurer would be able to cash-settle claim in the future if it could not complete repairs after “every reasonable attempt” was exercised.

The ruling rejected appeals from the homeowners that other damaged parts of the garage should be covered by the claim, saying there had been no evidence to indicate the falling scaffolding had caused this.

The claimants also wanted home contents covered, but AFCA said this was not provided in their home insurance policy.

AFCA required IAG to pay the homeowners $3000 for the “unusual degree of stress” caused by the mishandled claim and its delayed resolution.

“The insurer told the complainants (and AFCA) that the reason for its decision was that AB could not warrant repairs. This was unfair to the complainants. They were not told the true reason for the insurer’s decision, so they did not have a fair chance to argue against it,” AFCA said.

Click here for the ruling.